Baku, September 26, AZERTAC

Bilateral relations between Pakistan and Azerbaijan have been getting momentum for the last two years in which political leadership, economic diplomacy, media and embassies of both sides has played an important role due to which pace of people-to-people, business-to-business and government-to-government contacts have immensely enhanced in diverse sectors of economy. Resultantly the volumes of bilateral trade have been substantially increased between two sides which is good omen.

Moreover, during various high official meetings the two leaders also agreed to boost cooperation in the trade, business, defense, security, energy and other sectors which would gear-up mutually beneficial propositions in the days to come.

In this regard, during last two years, both sides discussed various avenues of collaboration between the two countries including bilateral trade, cooperation in energy and economic sectors.

Additionally, they also noted to joint work for the further strengthening of relations with focus on different fields like trade, connectivity, energy, tourism and Information Technology, education, culture, science & technology, space cooperation, agriculture, mining, infrastructure development, medical sciences, sports, cement, pharmaceutical, especially in liberated areas of Karabakh. Furthermore, bilateral cooperation in defence sphere mainly joint drills, training, military production, drones, fifth generation fighter plane, missile technology and last but not least, tanks and other modern war gadgetries in the days to come.

It hopes that the finalization of the Preferential Trade Agreement (PTA) and Transit Trade Agreement (TTA) between the two countries would further enhance scope, pace, and utility of the bilateral trade between two countries in the near future.

There has been immense increase in the exports of rice from Pakistan because of zero custom duties. Serious efforts are now being carried out and finalized to include more food items in this category, opening new window of opportunities for both the countries. In this context, the establishment of a High-Level Joint Working Group would be useful.

Negotiations for the Preferential Trade Agreement between two countries have been completed. Pakistan’s side has already shared a request list of 103 items with Azerbaijan on June 14, 2023, seeking market access. On the other hand, Azerbaijan has shared its request list of 84 items, and the Ministry of Commerce in Pakistan is currently conducting stakeholder consultations on these items. Hopefully it will be completed very soon and subsequently signed during this year.

The Transit Trade Agreement, Pakistan’s Ministry of Commerce shared the draft agreement with Azerbaijan on September 15, 2022 with the consensus of all stakeholders. The agreement encompasses all modes of transportation, including road, railways, air, and sea.

It is suggested that mutual tariff reduction modalities should be finalized as soon as possible aiming of further facilitating trade between Azerbaijan and Pakistan.

Energy is one of the important areas of bilateral cooperation between our countries. What aspects of this cooperation would you highlight? What is the potential for further expansion of energy cooperation?

It seems that energy cooperation between two countries have become hot topic and engine of further strengthening of bilateral relations between two countries.

Azerbaijan has agreed to provide liquefied natural gas (LNG) to Pakistan at discounted price. Baku will help Islamabad in the fields of oil and gas, aside from investing in Pakistan's solar energy industry which would definitely reduce energy woes of it.

Now both sides decided to commence the LNG shipments from Azerbaijan to Pakistan on a monthly basis, with concessional rates being applied to each cargo. To facilitate the collaboration on energy resources, the Pakistan State Oil (PSO) and State Oil Company of the Azerbaijan Republic (SOCAR) are engaged in government-level cooperation.

The government of Pakistan has expressed a desire to collaborate with Azerbaijan in the field of petrochemicals and solar energy. In this regard, the government extended invitations for Azerbaijan delegations to visit Pakistan, focusing on the economic, trade, aviation, and energy sectors.

What areas of the Azerbaijani economy may be of interest to Pakistani entrepreneurs? What industries are they willing to invest in?

There is huge scope for Pakistan private sector and companies to make investments in Azerbaijan economy including, infrastructure development, smart living, smart cities, green energies, digitalization, e-commerce, artificial intelligence, quantum technologies, bog data, community development, SMEs, Micro-Financing, hand-crafts, marble, cement, fertilizer, pharmaceutical, horticulture, fishing, public health, vaccines, disaster management, money markets and last but not least, aviation, tourism, banking, Islamic banking, education(with dual degrees), modern farming, dairy, renewables etc. Thus Pakistani businessmen and investors must avail this opportunity and make investments in Azerbaijan,

An important aspect of energy cooperation between our countries is related to renewable energy sources. How do you assess the potential for cooperation between our countries in this area?

While meeting with the Chief Executive Officer of the Alternative Energy Development Council of the Energy Ministry of Pakistan, Executive Director of the Private Energy and Infrastructure Council Shah Jahan Mirza the Director of the State Renewable Energy Agency of Azerbaijan floated a workable proposal for Pakistani companies to invest in Azerbaijan's renewable energy sector.

In this regard, necessary information was given on the potential of Azerbaijan's renewable energy, measures to realize this potential, and export opportunities. Pakistani companies have been invited to participate in future renewable energy auctions. Shah Jahan Mirza informed Azerbaijani colleagues about the reforms in the energy sector of Pakistan and the development of the renewable energy sector.

Obviously, invitation to Pakistani companies to invest in Azerbaijan's renewable energy sector is part of a larger effort to increase cooperation between the two countries.

It is good omen that the Azerbaijan-Pakistan Technology Forum was held in Baku to establish relations between the IT companies of Pakistan and the state and private partners in Azerbaijan. Representatives from 35 companies from Pakistan that operate in the fields of artificial intelligence, blockchain, cloud technology, and a number of areas of the ICT sector participated in the forum.

Pakistani IT companies have also been invited to operate and invest in the liberated territories of Azerbaijan. The government of Azerbaijan is doing reconstruction work and building smart villages and smart cities in the liberated territories and Pakistani IT companies have the potential to help in these processes.

The Pakistani IT sector is very big, and there is great potential to expand cooperation in the IT sector. It is hoped that the forum will move to active cooperation in the coming months and that Azerbaijani companies will visit Pakistan to get to know Pakistan's IT sector and seek investments in renewables sectors.

Over the past few years, the number of Pakistani tourists in Azerbaijan has increased significantly. How do you assess the prospects for further tourist exchange?

Fortunately, Azerbaijan Airlines (AZAL) has already started direct flights between Baku and Islamabad which would further boost tourism and strengthen cultural ties between two countries. It will further strengthen aviation cooperation leading towards greater trans-regional aerial connectivity, people-to-people and business-to-business contacts between two countries.

Since 2022 direct flights between two countries have been greatly contributing to these relations. Around 50,000 Pakistani tourists visited Azerbaijan during last year which is on the rise.

Moreover, the government of Azerbaijan facilitates the Pakistani tourist through an online visa which takes three hours in which Ambassador of Azerbaijan to Pakistan, H.E. Khazar Farhadov played an important role.

His close and constant liaison with Chambers of Commerce, businessmen, investors, private companies of Pakistan has further widened the scope of bilateral trade between two countries.

His innovative interactions with numerous Think Tanks and media outlets of Pakistan have further enhanced soft image projection of Azerbaijan which is creating mutually beneficial propositions for both the countries.

It is suggested that there should be close liaison between tourist operating agencies, tour operators, ministries of culture, tourism, history, civil aviation of both sides to further enhance bilateral tourism cooperation in which corporate sector of Karachi, Lahore, medical colleges/doctors, film industry and sport organization can play an important role in the days to come. New trends like Nomad visa should also be promoted to seek more and more tourists from both sides.

Close cooperation of media, film, social media, education, culture and people-to-people contacts would also be useful in this regard.

Dr Mehmood Ul Hassan Khan

Executive Director: The Center for South & International Studies (CSAIS) Islamabad

Regional Expert: Azerbaijan, South Caucasus & Central Asia